Aid funding must be reformed to end the "worrying" system that allows agencies to assess need as well as apply for cash, MPs have said ahead of a world humanitarian summit.

Terror laws that are hampering charities working in war-torn countries like Syria must also be tackled at the gathering in Istanbul later this month, according to the International Development Committee.

The international meeting is bringing together politicians, business leaders and aid organisations to agree how countries should respond to conflict and natural disasters.

But summit officials have admitted that they have been unable to agree a set of priorities and charity Medecins Sans Frontieres has pulled out, claiming the event is little more than a "fig-leaf of good intentions" that will fail to help those in need.

MPs said that the Department for International Development (Dfid) was spending record amounts on humanitarian aid but warned that demands would continue to grow against a backdrop of climate change, the rise of armed terror groups, water scarcity and population growth.

In a report, they called for the summit to focus on ways to prevent and resolve crises.

MPs also urged the summit to take action to reform humanitarian funding after being told that, as an aid organisation "you decide what the needs are, you write an appeal, you get the money, you decide how to spend it and then you judge for yourself whether or not you have been successful".

The committee said the "incentives" in the process " encourage" organisations to expand their activities.

" The global humanitarian system displays a worrying lack of separation of powers between those assessing needs and those appealing for funds," the report said.

"Dfid should propose the establishment of an independent body to be responsible for conducting needs assessments in crises. Dfid should work with like-minded donors in the build up to and at the summit to ensure this fundamental problem is addressed."

The committee also warned that charities and aid organisations were unable to " operate effectively due to unintended adverse consequences of counter-terrorism legislation" in some situations, particularly in areas like Syria.

"W e commend Dfid for taking steps to address this issue domestically, but we urge it to use the world humanitarian summit as a platform to address this problem at the global level."

The committee also called for a concerted push to address violations of in ternational humanitarian law.

Committee chairman Stephen Twigg said: " A great deal of preparation and consultation has gone into this summit, the first of its kind. There is recognition that the players involved need to get better at meeting the needs of people affected by conflict and disaster. But there is a distinct lack of agreement on what the priorities should be.

"In a world where the lives of millions of people are devastated by wars and disasters, the global community is struggling to cope with demands on funds and support," he added. " There is a real urgency to develop a new approach to address current and future humanitarian needs more effectively."